The present disclosure relates to a betting system and method for buying and selling contracts on financial markets.
Although betting in many diverse forms has been in existence for thousands of years, the concept of a bet on the future performance of one or more financial market indicators is a relatively recent one. Such a bet may take one of two forms, as will be described.
The first form of such a bet (the “spread bet”) is one which, if won by the making of a correct prediction, pays out a sum proportional to the market fluctuation. For instance, a speculator may bet that a given stock will fall within a set period of time, and, if this prediction is correct, may receive winnings in direct proportion to the amount by which the stock has fallen in that period of time.
The other form that such a bet may take is known as the “digital option”. Digital bets are of the same form as a traditional sporting bet in that the speculator predicts a certain event and receives either a fixed sum of winnings (if that event does occur) or no winnings (if the event does not occur). For instance, a speculator may bet that a certain stock index will rise to a certain level by a certain time. If the named index does reach this level, the speculator wins an agreed amount of money irrespective of any amount by which the index has exceeded the predicted level. It is this type of bet that is known as a “fixed odds” bet.
However, problems face the individual investor who wishes to place bets on the financial markets. The wide universe of financial instruments and derivatives products is typically available only to professional investors who have the financial resources and know-how to access these products.
Problems also face the bookmaker who wishes to offer financial bets to the private investor. These include the fact that financial bookmaking is labor-intensive, with skilled staff being required constantly to adapt the odds offered on an immense variety of possible bets to market conditions that are changing on a minute-by-minute basis.
The average size of a bet placed by an individual customer will, in general, be very small compared to the average size of a typical stock market direct investment. The potential profit to the bookmaker from such a small investment will therefore be too small for it to be economically viable to employ skilled staff to calculate the odds to offer to individual speculators sufficiently quickly.
A further problem facing bookmakers is that it is very difficult to accurately price complicated or unusual bets, and bookmakers typically offer only a few standard bets on a few markets.
A need exists for a system and method that alleviates some or all of the above problems, and which enables a bookmaker efficiently to offer a wide range of financial bets to speculators wishing to place relatively small bets.